OTTAWA, Dec. 8, 2016 /CNW/ – Saskatchewan’s economy contracted again this year, but conditions are forecast to improve gradually going forward. After declining by 1.5 per cent this year, overall economic growth is expected to resume in 2017, with GDP rising by 1.2 per cent, according to The Conference Board of Canada’s Provincial Outlook: Autumn 2016.
“The economic outlook for Saskatchewan is improving but the road to recovery won’t be easy. The downturn in commodity markets appears to have reached bottom but no swift pick-up in prices or development of new major projects is expected over the near term,” said Marie-Christine Bernard, Associate Director, Provincial Forecast, The Conference Board of Canada.
- Saskatchewan’s economy will not be in recession, but economic growth will remain weak at 1.2 per cent on average over 2017-18.
- Conditions remain difficult in a number of sectors but a slow turnaround is expected in the resource sector. With the exception of Newfoundland and Labrador, all provinces will see their economy expand next year.
The completion of a number of large-scale mining projects will create a gap in mining investment in the province. Investment spending as a whole dried up with the fall in oil prices and capital outlays are expected to remain sluggish until the end of the decade. In addition, total mining production in Saskatchewan will remain depressed this year and next. On the bright side, potash production is expected to be a contributor to the economy over the near term as new production at K+S Legacy mine comes online and activities at the idled Mosaic Colonsay mine may come back. There is, however, uncertainty in the potash industry as global inventories remain elevated and new potash mining investment will likely remain weak.
Another bright spot for the province is a recovery in the agriculture sector. After weather hampered this year’s harvest, Saskatchewan’s agriculture sector is expected to post a positive performance over the near term. Risks loom as well in the agriculture with the possible renewed trade restrictions from country-of-origin labeling (COOL).
As the economy begins to stabilize, a pick-up in the service sector should spur modest job creation and improve domestic demand conditions over the next few years. Saskatchewan workers can expect gains in employment in 2017, but wage gains will be marginal, reflecting the considerable slack in labour markets. Household consumption is expected to increase modestly over the forecast period and consumer spending on services will reap most of the benefits from the small gains that do occur. Financial and commercial services are forecast to begin to rebound in 2017.
The Provincial Outlook: Autumn 2016 is available via the Conference Board’s e-Library.